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Casper says university will still need to raise more money
STANFORD -- Despite Stanford's success in fundraising in recent years, President Gerhard Casper says there is mounting pressure to build the university's endowment and other funding sources in order to counteract decreasing federal support for higher education.
"If there is one figure I would like everybody to understand about Stanford's finance, it is a very simple one: Endowment income covers only 12 percent of our annual expenditures as a university," he said. "That means that 88 percent has to be raised every year afresh."
To meet some of that need, Casper and university fund-raisers established the Stanford Fund and the President's Fund in order to help increase the percentage of undergraduate alumni who contribute small- to medium-size gifts to the university on an annual basis. Both of those funds showed record growth in the 1995-96 fiscal year.
As of June 30, 1995, Stanford recorded an endowment of $3.09 billion. The university, like most institutions, spends only about 4 to 5 percent of the endowment's earnings each year, Casper explained. That's because the endowment is like a nest egg, designed to keep the institution running for generations to come.
"The fiduciary duty of the trustees is to make sure the endowment will keep up with inflation and will provide for future needs of the university," Casper said. "If we spend all our earnings, the endowment would be shrinking because inflation would cause its value to be eroded."
Stanford has for many decades been supporting many more projects than its endowment even remotely can support, Casper said.
"If you compare us with our competition, Princeton supports about 30 percent of its annual expenditures from its endowment, and at Harvard it's about 21 percent," he said.
Part of the reason for the discrepancy results from Stanford's relative youth compared to Ivy league schools. Most of Stanford's growth occurred in the period after World War II, Casper said.
"It was accomplished largely through federal government support of research, but that went to [yearly] expenditures," Casper said. "So, during that period, Stanford's growth was very, very fast much faster than its endowment growth.
"Now, we are in a period of transition in which we have to raise much more endowment, given all the threats that are coming from Washington in terms of reductions in federal support."
These challenges aside, Casper described last year's fundraising effort as impressive, saying he "couldn't be more pleased" with the results.
When he came to Stanford four years ago, Casper and the provost had about $2 million in unrestricted gifts at their disposal to help support emerging needs, such as a key faculty recruitment, scholarship or innovative projects that have little chance of receiving funding from outside the university.
The Stanford Fund, which provides a centralized pool of unrestricted funds for undergraduate education, and the President's Fund, which provides money to a limited number of innovative projects on campus that may otherwise lack funding, were designed, in part, to help increase unrestricted gifts.
Combined, the two funds have increased unrestricted gifts available to the president and provost to $7.3 million. It would require nearly $150 million of unrestricted endowment to generate that same amount.
"That shows the incredible power that [these] gifts can make," Casper said. "Together, they can make a huge difference. I would have no chance, none, to raise that much money in endowment that would be unrestricted. I think we are clearly on the right track here."
About 60 percent of the money raised last year by the Stanford Fund went toward financial aid, Casper noted. Additional monies were allocated to freshman seminars, the Center for Teaching and Learning's project on oral communication and the Stanford ballet. It also funded the student partnership program, which allows students who want to earn money for various student organizations to do so by working for the Stanford Fund.
The student partnership program, which was funded with $150,000 from the Stanford Fund last year, was so successful that Casper has decided to allocate an additional $75,000 to support it for the upcoming year.
"I thought it was important to involve more students in this," Casper said.
One way to do this is to encourage students to contribute to undergraduate education before they graduate. Now, when the president greets incoming students and their parents at freshman convocation, he makes it a point to talk to them about the role their predecessors have played in helping to fund their education.
Stanford Fund donors increased by 22 percent from 1994-95 and Stanford Fund dollars increased by 37 percent from the previous year. These figures include the first-ever challenge to freshman parents, who made gifts to the Stanford Fund totaling $99,093. The money they raised earned $100,000 in challenge funds from an anonymous donor.
"More important than the dollar figure is the fact that the participation rate of freshman parents was 51 percent," Casper said. "I think that is a remarkable development."
The President's Fund also had a surge in donors and dollars last year, with 145 individuals contributing $2.1 million, Casper noted.
The fund helped support projects to preserve the quality of Stanford's faculty; create a physics theory institute; improve the effectiveness of physics demonstrations in the new regional teaching facility; and support graduate research opportunities.
It also provided monies to acquire the Gustave Gimon Collection on French Political Economy; support graduate research opportunities; attract the brightest undergraduate students; and expand the reach of Stanford's teaching and research through technology.
"When you look at what we have supported from the President's Fund last year, it shows we can do things that without this discretionary money we would probably have had to forgo," Casper said.
One example of such a project is the fledgling Physics Theory Institute, which received $358,198 from the President's Fund last year.
The money allowed the university to take the first steps toward setting up an institute where faculty, research physicists and students can learn about the most recent developments in physics through discussions and seminars led by visitors and through scientific collaborations between Stanford physicists and visitors.
"This is something of incredible importance and it is the kind of thing we would never have been able to do without the President's Fund," Casper said.
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